How does the performance of SPDRs and MidCap SPDRs compare with the performance of the S&P 500 and S&P MidCap 400 Indexes?
SPDRs and MidCap SPDRs are designed to provide investment results that generally correspond to the price and yield performance of the underlying S&P 500 and S&P MidCap 400 Indexes. One market mechanism that helps to keep SPDRs and MidCap SPDRs trading at a price close to the value of their underlying portfolios is arbitrage. Because SPDRs and MidCap SPDRs are both redeemable into the stocks of the S&P 500 and S&P MidCap 400 Indexes respectively and can be created from the stocks of the S&P 500 and S&P MidCap 400 Indexes respectively on any day, arbitrage traders may move to profit from any price discrepancies between these Index Shares and their underlying indexes, which in turn helps to close any price gaps. (Index Share creations and redemptions are restricted to large transactions in multiples ranging from 25,000 for MidCap SPDRs to 50,000 for SPDRs, usually carried out by institutional investors.) Of course, because of the forces of supply and demand and other market factors, there
